Examines the relationship between three key state policy variables and enrollments in private higher education. Finds that institutional density and low public tuition prices negatively affect enrollments in large, moderately selective private institutions and that state student-aid funding adversely affects enrollments in small, low-selective…

Models of regulatory policy based on industrial organization theory can be applied to governmental coordination in higher education. They show that the relationship between costs and enrollment depends on student demand. When demand is stable or decreasing, governments should promote competition and keep costs down by reducing regulation. (RW)